Hindsight would make millionaires of us all. Anybody who knew what May held in store for Monitise (LSE: MONI) would have tossedevery spare penny at the stock, because it is up a mighty 30% over the month.
Hardened Monitise observers arent getting tooexcited, they know all too well that one great month can swiftly be followed by a lousy one.
EvenMay had a chilly finish, with the share price coolingnearly 10% on Friday morning, following news of the deferred consideration relating to the acquisition of Monitise Yazilim AS in February last year.
Monitise issued 80m new ordinary shares at 1p each on Thursday, the first of two potential deferred consideration payments related to the deal. Shareholders dont like to see their holdings diluted, even ifit was just 0.4% of shares in issuance.
On The Moni
Some may find this volatility rather strange given Monitises scale and prospects, with 33 million customers registered for its patented mobile banking technology, which already accounts for $101bn of payments, purchases and transfers annually.
It is stranger still when you consider its pipeline of opportunities and roster of big name clients, which include Santander, MasterCard, IBM, Telefonica, HSBC, Visa Europe and RBS.
Monetiseadded another big name tie-up inMay, SocGen, to power its newpan-African mobile banking service.This was the unnamed contract win that Monitise hinted at in February, in a bid to boost market confidence.
It needs to show investors that it can keep piling on the clients and build scalegiven thatcompetition is likely to grow as the cashless society advances.
The big concern is that it will burn through its cash before the profits finally start rolling in, which chief executive Elizabeth Buse says should happen next year. As for 2015, it is on course to lose up to 50m.
With cash holdings of 127m at the last count I heard, success or failure maybe a close run thing.
The company has justeased managements remuneration targets byreplacing original conditions such as Buses share price goalof 68p (a long way from todays 12.5p) with vague but more realistic revenue EBITDA and user targets, in a bid to keep senior staff incentivised.
This stock could ultimately be a five or six bagger, but I wouldnt want to bet my career on it.
Some investors are wondering why big-name institutions arent following Leon Cooperman at Omega Advisers lead by piling in at todays lowvaluations, especially at the height of a supposed tech bubble.
If you want to get into the mobile money at ground level, Monitise is a high-risk, high-reward way to do it.
Although be warned, judging by comments on the Monitise message boards, this frustrating stock could drive you a little crazy.
So what willhindsight tell us about June? Ill let you know next month.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK owns shares of Monitise. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.